Why "zodling" and the current dev fund model are killing Zcash
Some uncensored thoughts
I recently said that anyone who says “zodl” should be taken outside and beaten with a stick. Now, while I was kidding and don’t condone violence, my dislike for the zodl meme remains.
I believe the current state of the Zcash development fund, and culture around it, are killing Zcash’s community, the price of ZEC, and stalling any meaningful efforts around adoption.
This is a short post where I’ll cover these three points and then provide some closing thoughts.
Current Zcash Development Fund Model
Everything is an experiment, and most funding models in cryptocurrency have different tradeoffs. The Zcash development fund is argued to provide sustainability and progressive decentralization, and should support the community of Zodlers that are basically buying and holding ZEC (while miners, ECC and ZF sell it) to sustain the ecosystem.
It’s never this black and white, but when you really get into it, this is kind of the current state. I argued in my talk at Zcon4 that this model creates a level of discontent among community members who buy and hold the coin (which is justified). Since Zcash has not necessarily delivered on the things its promised, there needs to be change. I see two paths forward:
Slightly change the current model to create pseudo-jurisdictional decentralization and divide power amongst already influential organizations in the Zcash ecosystem.
Create a reasonable, but radical, change that provides immediately worthwhile jurisdictional decentralization, responsible checks against power, and distributes ZEC to more people through structured, contributor-centric programs.
I believe these are the only two paths. I predict that some members (individuals and organizations) of the current dev fund will advocate for variations of these two ideas. Any idea closely related to number 1 cannot win.
I also believe the current dev fund creates an incentive model where community members buy and hold Zcash, rely on ECC and ZF (and to an extent ZCG-funded projects) to deliver, and hope the price of ZEC to goes up. This contributes to an idea known as “zodling”.
Zodling and the price of Zcash
The status quo has not produced results that community members and cryptocurrency users are content with. The price of Zcash against Bitcoin is an indicator for that.
This isn’t because anyone contributing to Zcash really talks about the price of ZEC. It’s because of the way most people acquire Zcash. Zcash is largely acquired through centralized exchanges where you must provide KYC/AML information to sign up, link your bank account, and spend your salary on a platform where the UI is telling you if the price of Zcash is up or down.
So, for those who disagree with me, what incentive model does that create?
When I look at other privacy-oriented communities who use cryptocurrencies, I see somewhat of a hatred towards this model. I use the word “hatred” very carefully here. They seek to construct protocols, applications and communities that discourage any use of centralized exchanges, encourage sovereignty and build peer-to-peer markets that support trade, commerce, and community. These groups will likely never use Zcash, and are arguably improving their privacy guarantees to rival shielded Zcash.
Now, you might think all of this is unsustainable. That is a fair argument. So let’s look at the other groups who are actively using cryptocurrencies.
Communities that are really driving the adoption of cryptocurrencies, in my opinion, are interested in the “Web3” ethos. They like tokenization, ownership, digital collectibles and price speculation. They’re actively building decentralized protocols, scaling solutions and applications that can/will drive these economies. Is Zcash capable of being a part of this ecosystem right now?
No.
If features that enable this are on the Zcash roadmap, will they come to market faster than other protocols who are working on similar things? E.g. Namada, Penumbra, and Railgun? Will Zcash’s solutions be better?
I don’t know.
Both of these counter examples drive usage and value to cryptocurrency networks, and their native assets, through on-chain activity. Without the usage and exponential growth of on-chain Zcash transactions, we won’t see the same type of value accrual and price appreciation that the most dedicated of zodlers want.
The solution? Kill the zodler meme and provide easy ways for the Zcash community to acquire and use ZEC permissionlessly (and without KYC) right now. Also enable people to create applications that invite a new wave of people to join the Zcash community.
If future protocol improvements drive more utility to Zcash, and enable more interoperability with other networks, great! However, we can’t simply wait for those changes to happen.
PS. This doesn’t mean use all the Zcash you hold. Maybe earmark 10-20% of your holdings for usage of on-chain Zcash applications, and more of your time to help contribute to programs driving this usage. Contributing too hard? Let people know why and what changes they could implement to make that easier for you.
Adoption
I don’t have an answer for this. My mind says make this change to the dev fund to start a wave of new adoption:
Create a reasonable, but radical, change that provides immediately worthwhile jurisdictional decentralization, responsible checks against power, and distributes ZEC to more people through structured, contributor-centric programs.
This change doesn’t necessarily build the killer application, or use case, that drives Zcash adoption. But, it gives more people a chance to use Zcash and possibly create that application for themselves.
When I created ZecHub, I just wanted to create a contributor-centric, education platform that wouldn’t die if I stopped working on Zcash full-time (which I have). The indirect result of ZecHub is now people, who can’t buy Zcash through centralized exchanges, have a means to acquire Zcash through contributing to ZecHub.
I’m not going to spout off some techno-colonialist statement claiming this was my intention. It was just a result of creating a permissive, open-source model.
But Zcash is open-source! Yes, but is it permissive?
I don’t think it is. So I’d argue we should make it easier for users to directly access the block reward and build cool applications that onboard more people. I think this has a better chance of driving adoption than our current model (or any slight iteration of it).
Closing thoughts
I think Zcash has a short time period (6~ months) to change course. I also think the changes need to be drastic (although reasonable).
My biggest takeaway from Zcon4 was that the community needs to drive this change. Developers and protocol maintainers are busy with code, and the people at the top of the Zcash social hierarchy have their own preferences and biases. Regarding bias, there’s nothing wrong with that, but it must be contested with another set of bias. That of the community.
This is the only way the Zcash community will actually change anything. This is the only way Zcash has any non-zero chance at driving adoption. And, this is the only way the price of Zcash will ever recover.
Kill the “zodl” meme, drastically change the development fund, and give more power to the Zcash user.
And while people have claimed I’ve “quit” or “left”, I’ll continue working in the background to help drive the change I want to see.
God speed.